IDEAS home Printed from https://ideas.repec.org/a/eee/phsmap/v567y2021ics0378437120309973.html
   My bibliography  Save this article

Thermodynamics of markets

Author

Listed:
  • Rashkovskiy, S.A.

Abstract

We consider the thermodynamic approach to the description of economic systems and processes. The first and second laws of thermodynamics as applied to economic systems are derived and analyzed. It is shown that there is a deep analogy between the parameters of thermodynamic and economic systems (markets); in particular, each thermodynamic parameter can be associated with a certain economic parameter or indicator. The economic meaning of such primordial thermodynamic concepts as pressure, volume, internal energy, heat, etc. has been established. The thermostatistics of the market is considered. It is shown that, as in conventional thermostatistics, many market parameters, such as price of goods, quantity of goods, etc., as well as their fluctuations can be calculated formally using the partition function of an economic system.

Suggested Citation

  • Rashkovskiy, S.A., 2021. "Thermodynamics of markets," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 567(C).
    • Handle: RePEc:eee:phsmap:v:567:y:2021:i:c:s0378437120309973
    DOI: 10.1016/j.physa.2020.125699
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378437120309973
    Download Restriction: Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000
    File URL: https://libkey.io/10.1016/j.physa.2020.125699?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sousa, Tânia & Domingos, Tiago, 2006. "Equilibrium econophysics: A unified formalism for neoclassical economics and equilibrium thermodynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 371(2), pages 492-512.
    2. Foley Duncan K., 1994. "A Statistical Equilibrium Theory of Markets," Journal of Economic Theory, Elsevier, vol. 62(2), pages 321-345, April.
    3. Khrennikov, Andrei, 2005. "Financial heat machine," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 350(2), pages 487-490.
    4. Anand Banerjee & Victor M. Yakovenko, 2009. "Universal patterns of inequality," Papers 0912.4898, arXiv.org, revised Apr 2010.
    5. Adrian Dragulescu & Victor M. Yakovenko, 2000. "Statistical mechanics of money," Papers cond-mat/0001432, arXiv.org, revised Aug 2000.
    6. Smith, Eric & Foley, Duncan K., 2008. "Classical thermodynamics and economic general equilibrium theory," Journal of Economic Dynamics and Control, Elsevier, vol. 32(1), pages 7-65, January.
    7. Constantino Tsallis & Celia Anteneodo & Lisa Borland & Roberto Osorio, 2003. "Nonextensive statistical mechanics and economics," Papers cond-mat/0301307, arXiv.org.
    8. Victor M. Yakovenko, 2016. "Monetary economics from econophysics perspective," Papers 1608.04832, arXiv.org.
    9. Chakrabarti,Bikas K. & Chakraborti,Anirban & Chakravarty,Satya R. & Chatterjee,Arnab, 2013. "Econophysics of Income and Wealth Distributions," Cambridge Books, Cambridge University Press, number 9781107013445, December.
    10. J. Doyne Farmer & Fabrizio Lillo, 2003. "On the origin of power law tails in price fluctuations," Papers cond-mat/0309416, arXiv.org, revised Jan 2004.
    11. Xavier Gabaix & Parameswaran Gopikrishnan & Vasiliki Plerou & H. Eugene Stanley, 2003. "A theory of power-law distributions in financial market fluctuations," Nature, Nature, vol. 423(6937), pages 267-270, May.
    12. Richmond, Peter & Mimkes, Jurgen & Hutzler, Stefan, 2013. "Econophysics and Physical Economics," OUP Catalogue, Oxford University Press, number 9780199674701, Decembrie.
    13. Tsallis, Constantino & Anteneodo, Celia & Borland, Lisa & Osorio, Roberto, 2003. "Nonextensive statistical mechanics and economics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 89-100.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rashkovskiy, S.A., 2021. "Economic thermodynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 582(C).
    2. Aktaev, Nurken E. & Bannova, K.A., 2022. "Mathematical modeling of probability distribution of money by means of potential formation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 595(C).
    3. Vítor A. F. Costa, 2024. "A Four Laws Structure for Looking at Economics through the Eyes of Thermodynamics," Energies, MDPI, vol. 17(17), pages 1-39, August.
    4. Gündüz, Güngör & Kuzucuoğlu, Mahmut & Gündüz, Yalın, 2022. "Entropic characterization of Gross Domestic Product per capita (GDP) values of countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 603(C).
    5. Vítor A. F. Costa, 2024. "Looking at Economics through the Eyes of Thermodynamics," Energies, MDPI, vol. 17(11), pages 1-41, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rashkovskiy, S.A., 2021. "Economic thermodynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 582(C).
    2. Sergey Rashkovskiy, 2020. "Thermodynamics of markets," Papers 2010.10260, arXiv.org.
    3. Venkatasubramanian, Venkat & Luo, Yu & Sethuraman, Jay, 2015. "How much inequality in income is fair? A microeconomic game theoretic perspective," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 435(C), pages 120-138.
    4. Yong Tao & Xiangjun Wu & Tao Zhou & Weibo Yan & Yanyuxiang Huang & Han Yu & Benedict Mondal & Victor M. Yakovenko, 2019. "Exponential structure of income inequality: evidence from 67 countries," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(2), pages 345-376, June.
    5. Rashkovskiy, Sergey A., 2019. "‘Bosons’ and ‘fermions’ in social and economic systems," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 514(C), pages 90-104.
    6. N. J. Chater & R. S. MacKay, 2024. "Thermal Macroeconomics: An axiomatic theory of aggregate economic phenomena," Papers 2412.00886, arXiv.org, revised Mar 2025.
    7. Victor M. Yakovenko, 2012. "Applications of statistical mechanics to economics: Entropic origin of the probability distributions of money, income, and energy consumption," Papers 1204.6483, arXiv.org.
    8. Costas Efthimiou & Adam Wearne, 2016. "Household Income Distribution in the USA," Papers 1602.06234, arXiv.org.
    9. Hutzler, S. & Sommer, C. & Richmond, P., 2016. "On the relationship between income, fertility rates and the state of democracy in society," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 452(C), pages 9-18.
    10. Caticha, Ariel & Golan, Amos, 2014. "An entropic framework for modeling economies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 408(C), pages 149-163.
    11. Smerlak, Matteo, 2016. "Thermodynamics of inequalities: From precariousness to economic stratification," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 441(C), pages 40-50.
    12. Ni, Xiao-Hui & Jiang, Zhi-Qiang & Gu, Gao-Feng & Ren, Fei & Chen, Wei & Zhou, Wei-Xing, 2010. "Scaling and memory in the non-Poisson process of limit order cancelation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(14), pages 2751-2761.
    13. Kiran Sharma & Parul Khurana, 2021. "Growth and dynamics of Econophysics: a bibliometric and network analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(5), pages 4417-4436, May.
    14. Monaco, Andrea & Ghio, Matteo & Perrotta, Adamaria, 2024. "Wealth dynamics in a multi-aggregate closed monetary system," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 646(C).
    15. Markus P. A. Schneider, 2018. "Revisiting the thermal and superthermal two-class distribution of incomes: A critical perspective," Papers 1804.06341, arXiv.org.
    16. Jovanovic, Franck & Schinckus, Christophe, 2017. "Econophysics and Financial Economics: An Emerging Dialogue," OUP Catalogue, Oxford University Press, number 9780190205034, Decembrie.
    17. Noe Rodriguez-Rodriguez & Octavio Miramontes, 2022. "Shannon entropy: an econophysical approach to cryptocurrency portfolios," Papers 2210.02633, arXiv.org.
    18. Jangho Yang, 2018. "Information Theoretic Approaches In Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 32(3), pages 940-960, July.
    19. Victor Olkhov, 2017. "Econophysics Macroeconomic Model," Papers 1701.06625, arXiv.org.
    20. Sergey A. Rashkovskiy, 2018. "'Bosons' and 'fermions' in social and economic systems," Papers 1805.05327, arXiv.org.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:phsmap:v:567:y:2021:i:c:s0378437120309973. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.